Home values are rising – but your property taxes don’t need to!
Opening your tax bill can be a cause for shock, if not outrage. But you can investigate whether the assessed value of your home is too high, and the basis of an excessive property tax bill. There are measures you can then take to have that value reduced and in so doing you may be able to knock some dollars off your property tax bill.
How Your Maryland Tax Bill Is Calculated
In Maryland, two factors determine your tax bill: the taxable value of your home, and the tax rate.
Here’s an overview of these factors: The process starts when the tax assessor determines your home’s taxable value. In Maryland, the taxable value of a home is 100% of its “full cash value” – basically, what the home would sell for on the open market.
If the assessor raises the assessed value of your home, the increase will be phased in over a three-year period. Let’s assume that the old value was $100,000 and the assessor ups the value to $130,000. In the first year after the increase, your home will have a taxable value of $110,000; then $120,000 in the second year, and $130,000 in the third year.
The taxing authorities multiply the taxable value of your home by the tax rate to arrive at the tax you’ll owe. Let’s say the taxable value of your home is $300,000 and the tax rate is $10 for every $1,000 of taxable value. Your property tax for the year will be $3,000 (300 x $10 = $3,000).
Local officials set the tax rate, so the rate varies depending on where you live. You can’t do much about the tax rate except to vote wisely for the elected officials who determine the tax rate, and carefully consider revenue issues that appear on the ballot.
But the story is different for the taxable-value factor. If you can prove that houses similar to yours in your neighborhood are valued less you could win!
How to Check the Official Tax Record for Your Home
The tax record for your home may contain inaccurate or incomplete information that leads the tax assessor to place too high a value on it. You can get of a copy of the tax record at the tax assessor’s office but it’s a lot easier to check this online at the Maryland Department of Assessments.
Review the tax record for errors. Among other things, check the following:
- Is your home correctly classified as residential property?
- Is the size of your home and the lot it sits on correctly stated?
- Does the record accurately list the number bathrooms?
- Is the age of your home accurately stated?
- Does the record give you the benefit of all the tax breaks that you may qualify for – such as those that may apply based on your income, age, disability, military service, homestead application recorded?
If there’s wrong or incomplete information, let the tax assessor know so that the record can be corrected and the taxable value adjusted. But even if the tax record is accurate, you may disagree with the tax assessor’s conclusion regarding the market value of your home. In that case, you’ll need to do more.
Gather Information About Whether Your Home Has Been Fairly Valued
Two types of information can help you establish that the tax assessor has placed too high a taxable value on your home. The first (and most important) is how the assessor has treated homes similar to yours. The second is how much homes like yours are currently selling for.
Taxable Values of Similar Homes
Review the assessment records for homes in your community that resemble your own. You’ll find those records at the Maryland website mentioned above. Finding comparable homes will take time and effort, but can be worth it if you believe that your home is truly over-valued. Try to find homes that have approximately the same square footage as yours and, preferably, are located in the same neighborhood or a nearby one. If similar homes have a taxable value lower than yours, this is strong evidence that you’re over-assessed.
Sale Prices of Similar Homes
If you bought your house recently, the price you paid is excellent evidence of its current value. Regardless of when you bought your home, you should gather information about recent sales prices of similar homes in your community.
Some online resources such as Zillow can be useful. Try to avoid transactions in which the buyer has purchased a home from a relative, or at a foreclosure or property tax sale. The sales prices in such transactions may be artificially low and won’t be convincing evidence of true market value.
You can also consider asking Sheryl Romeo Real Estate to give you information about recent home sales in your area from the Multiple Listing Service database. We can prepare a Comparative Market Analysis for you to use as evidence that property taxes are too high or give you some piece of mind if the assessed value is actually accurate.
Tip: If you recently re-financed your home or took out a home equity loan, the lender probably ordered a professional appraisal. Get a copy of it. It may give you powerful ammunition in your quest for a reduced taxable value.
Tip: The assessor doesn’t know what’s inside your house. So if you have major problems that lower your value, take some pictures and include in your appeal.
After investigating the taxable value of your home, you may conclude that the number set by the assessor is too high. You’ll want to appeal!
What You Need to Challenge the Taxable Value of Your Home in Maryland
To successfully challenge the taxable value, you’ll need to establish at least one of the following facts:
The tax assessor relied on information that is incorrect or incomplete.The tax assessor set the taxable value of your home that is higher than the taxable values of similar homes in your community.
The tax assessor assumed that the current market value of your home is higher than it actually is.
Useful Evidence for Your Appeal
In pursuing your appeal, several types of evidence may be useful, including:
- a recent appraisal of your home
- a contractor’s report showing repair work needed on your home and how much the work will cost
- documents showing actual sales prices in your neighborhood, and
- photographs of homes similar to yours, together with a list of their sales prices or taxable values.
You can request a hearing for your appeal or submit a written appeal.
For more information on tax appeals in Maryland, look at The Assessment Appeal Process posted by the Maryland Department of Assessments and Taxation